Institutional FX Insights: JPMorgan trading Desk Views 16/6/26
JPM G10 FX Daily
EUR: Low Vol, Low Follow-Through, Fed First
Yesterday was the first time in a while that our volumes surprised to the downside.
Over recent weeks, days that felt long still beat expectations, even in choppy ranges. Yesterday did not.
Why the lack of follow-through after the weekend news?
Likely because there are still no details on:
What has actually been agreed.
How straightforward the Strait reopening will be.
Whether the deal is anything more than a can-kick.
And, of course, we have the Fed tomorrow with the Warsh wildcard.
Oil around $80 and US 10s around 4.40% feel “enough” without further clarity.
I was right not to chase the dollar blindly lower yesterday.
The setup remains complicated. There are offsetting factors that could keep us rangebound for the next few weeks. Let’s see how Warsh’s first meeting comes across before committing too hard.
For now, I am staying in crosses and trying to improve averages through day trading, which is easier said than done.
Core positions remain:
Short EUR
Short CHF
Long ZAR
Long MXN
EUR/USD: First Resistance Worked
EUR topped out exactly where it had to: the zone we broke down from after the strong payrolls print.
Rally sellers hoping for more of a spike have been disappointed for now.
I do not think this tells us anything meaningful yet, apart from the fact that we are going nowhere fast.
I scaled into a small EUR/USD short. But if we get a low 1.15 handle before the Fed, I would be happy to take those back and stay flexible.
ZEW is the only calendar item today, and it is unlikely to excite anyone.
Trade bias: Small EUR/USD short, but flexible pre-Fed.
Resistance: 1.1600/1.1630 post-payrolls breakdown zone.
Cover zone: Low 1.15 handle before Fed.
Portfolio: Short EUR/CHF versus long ZAR/MXN.
Catalyst: Warsh Fed tomorrow.
Risk: Warsh sounds less hawkish and EUR squeezes.
GBP: Event Risk Building, Stay Long EUR/GBP
Not much to update.
Details of what has been “signed” are still pending, and oil is struggling to get onto a 70 handle.
Everyone is waiting for Warsh and the Fed tomorrow night. The USD is broadly consolidating its losses, with minimal net flow yesterday.
For sterling, we still have a barrage of risk events:
CPI
LFS
MPC
Makerfield
On Makerfield, the FT reported that Burnham’s camp is still holding out hope Starmer may choose an orderly timetable for stepping down once Makerfield is done.
Personally, I cannot see it at this point, but stranger things have happened.
This would not change the end result, but it could meaningfully change the succession timing, especially given how drawn out the leadership campaign could become around summer recess.
I am keeping EUR/GBP length here.
If 0.8670/80 is seen today, I would trim.
Levels:
EUR/GBP support: 0.8600
EUR/GBP trim zone: 0.8670/80
Cable range: 1.3300/1.3480
Trade bias: Long EUR/GBP.
Trim zone: 0.8670/80.
Support: 0.8600.
Cable range: 1.3300/1.3480.
Catalysts: CPI, LFS, BoE, Makerfield.
Risk: UK data surprises hawkish and GBP squeezes.
JPY: BoJ Yawn, MoF Could Get Opportunistic Around Fed
Board member Asada voting against the rate hike was probably the only headline that deviated from expectations in the BoJ decision.
Uchida delivered one of the tightest USD/JPY ranges I have ever seen for a press conference: around 20 pips.
Now that the “press conference ends” headline has landed, is it time for USD/JPY to go off to the races?
Maybe.
But it would not surprise me to see a rate check today on a break of 160.725, the prior cycle high.
Bold action feels almost impossible ahead of the Fed. So tactically, if USD/JPY trades on a 161 handle today or tomorrow, I would look to buy very short-dated USD/JPY downside to cover the Fed meeting.
It may be a yawn. But JPY short positioning is gathering steam, and with the MOU under the belt, MoF may have its finger on the opportunistic trigger for the Warsh presser.
Trade bias: No outright position; consider short-dated USD/JPY downside on 161 handle.
Key level: 160.725 prior cycle high.
MoF risk: Rate check possible; bold action more likely post-Fed.
Positioning: JPY shorts gathering steam.
Risk: Warsh hawkishness pushes USD/JPY disorderly higher.
CHF: Still a Funder, Long USD/CHF as Hedge
The franc reversed part of yesterday’s move, though overall CHF flows were muted.
We still expect CHF to be used as a funder over the medium term.
There is scope to be long USD/CHF here, primarily as a hedge against some USD/EM shorts.
We maintain this view ahead of tomorrow’s Fed meeting.
Trade bias: Medium-term bearish CHF.
Expression: Long USD/CHF as hedge against USD/EM shorts.
Flow: Muted.
Catalyst: Fed tomorrow.
Risk: Dovish Warsh and risk-on carry weigh on USD/CHF.
AUD / NZD: RBA Keeps AUD Supported on Crosses
The RBA left rates unchanged as expected and delivered a data-dependent but hawkish message.
Inflation remains a concern. The statement concluded with:
“It will do whatever it considers necessary to achieve that outcome, including increasing the cash rate target further if required.”
In the press conference, Bullock played down recent monthly inflation data, stressing that the RBA is focused on the quarterly print. That is already known, but it matters because the 29 July CPI release will be significant for the August meeting.
Bullock acknowledged that growth will come in lower, but framed this as a natural consequence of getting inflation down. That is a statement of fact rather than a major concern, unless growth rolls over — which the RBA does not forecast.
AUD is unchanged. There is no smoking gun for further appreciation today, but the RBA retains its hawkish bias.
AUD should continue to trade well on crosses, and I retain a bullish bias.
Key Crosses
EUR/AUD
Trading between the 50dma near 1.6338
And the 100dma near 1.6488
AUD/NZD
Found support yesterday from the downbeat NZIER survey.
A close above the 50dma near 1.2150 would suggest a revisit of the 2026 high at 1.2290.
Trade bias: Bullish AUD on crosses.
RBA: Hawkish hold, data-dependent.
Key CPI: 29 July quarterly inflation.
AUD/NZD trigger: Close above 1.2150.
AUD/NZD target: 1.2290.
Risk: Fed hawkishness hits high beta.
CAD: USD/CAD Breaks 1.4000, Take Some Profit Soon
USD/CAD finally broke above 1.4000 this morning.
Drivers:
Oil continued to sell off after US-Iran de-escalation.
USD opened better bid.
Investors remain cautious ahead of Warsh’s first Fed meeting.
No change to the view: remain short CAD on crosses.
That said, we are approaching levels where it makes sense to start taking some profit.
Trade bias: Short CAD on crosses.
USD/CAD: Broke above 1.4000.
Driver: Lower oil and pre-Fed USD bid.
Tactical: Start considering profit-taking.
Risk: Oil stabilises or Fed triggers USD reversal.
SEK / NOK: Central Banks Should Reinforce NOK Carry Over SEK
The Riksbank and Norges Bank both meet this week and are expected to leave rates unchanged.
Riksbank
Core inflation YoY rose in May from 0% to 0.5%, but that was still 0.4pp below the Riksbank forecast.
Governor Thedeen has expressed concern about higher inflation risks, so the rate path will be raised.
There are only 2bp in the current 2026 path, so any increase will look more hawkish. The question is how much.
Arguments for a smaller increase:
Inflation remains below forecast.
Oil is lower after the Middle East agreement.
Uncertainty around the situation persists.
That could imply around a 50% chance of a hike.
But with a weaker SEK and the ECB having hiked last week with more to come, the path may instead move to reflect a full hike by year-end. That is also in line with JPM economists.
Market pricing for year-end is around 30bp, so the bar is high for the Riksbank to deliver something overtly hawkish relative to pricing.
With a further 56bp priced for the ECB, the Riksbank remains a low yielder and SEK remains a funder. Any short-term SEK strength should dissipate quickly.
Norges Bank
No out-of-consensus view this time. Norges should leave rates unchanged at 4.25%.
May inflation printed one tenth above the central bank forecast. RNS also showed upward wage revisions, so the inflation outlook remains uncomfortably high, even with some comfort from a weaker growth outlook.
Norges will likely conclude that the domestic economy has not materially changed since the last meeting.
With inflation again above forecast, JPM economists calculate that the rate path will be raised to 4.5% for end-2026. That is similar to current market pricing, so the impact should be limited.
NOK/SEK
The combined central bank outcomes should reinforce the carry argument for NOK over SEK, and for NOK as part of carry baskets.
There are other issues at play, particularly the fall in energy prices. But EUR/NOK RSI is now overbought, and if energy markets stabilise, NOK should reassert itself as an outperformer.
We could explore long NOK/SEK again after the meetings.
Trade bias: Look to re-engage long NOK/SEK post-meetings.
Riksbank: Hold expected; rate path likely raised, but high bar to out-hawk market.
Norges: Hold expected at 4.25%; path may rise to 4.5% for end-2026.
NOK support: Carry and sticky inflation.
SEK: Still a funder.
Risk: Energy keeps falling and overwhelms NOK carry.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!